p53 is the most common mutation in human cancers, being inactivated in over half of all human tumors. Inhibition of p53 transcription function, either through mutation or interaction with viral transforming proteins, correlates strongly with oncogenesis. Human T-cell lymphotropic virus type 1 (HTLV-I) is the etiologic agent for adult T-cell leukemia. HTLV-I transforms lymphocytes and the viral encoded protein, Tax, plays a primary role in viral transformation. We have shown that wild- type p53 in HTLV-I transformed cells is stabilized. The present studies were initiated to directly analyze whether the p53 in HTLV-I-transformed cell lines was transcriptionally active and to identify the viral gene product responsible for stabilization and inactivation. Transfection experiments, using a p53-responsive reporter plasmid, and gamma- irradiation studies demonstrate that the wild-type p53 in HTLV-I- transformed cell lines is not fully active. Further, we demonstrate that the HTLV-I transforming protein, Tax, stabilizes and inactivates p53 function. Cotransfection of Tax with p53 results in a greater than 10- fold reduction in p53 transcription activity. Using Gal4/p53 fusion proteins, we demonstrate that Tax inhibition of p53 transactivation function is independent of sequence-specific DNA binding. Moreover, Tax inhibits p53 function by interfering with the activity of the N-terminal activation domain (amino acids 1-52). We conclude that Tax is involved in the inactivation of p53 function and stabilization of p53 in HTLV-I- infected cells. The functional interference of p53 function by Tax may be important for transformation and leukemogenesis.